Chinese book prices soar amid paper crunch

Customers browse at a Beijing bookstore. Voracious demand and a crackdown on small, polluting paper mills have pushed up paper prices by 10 percent this year and forced publishers to raise prices.
(Ng Han Guan/Associated press)

BEIJING - For Chinese fans, the latest Harry Potter book is not so affordable. Neither are the latest Dan Brown novels and classic Chinese fiction.

Voracious demand for books and a crackdown on small, polluting paper mills have caused a paper crunch in China, pushing up the price of paper by 10 percent so far this year and forcing printers to delay books and publishers to raise prices.

So far the problems have been largely confined to China, but experts say that if the trend is unchecked, consumers worldwide could find themselves facing higher book prices.

The Chinese paperback translation of "Harry Potter and the Deathly Hallows" sells for $9 - more than twice the price of its predecessors and a slice out of disposable income that in cities still averages less than $165 a month.

"This one is too expensive if you want to buy the whole series," said 21-year-old university student Li Jie at a bookstore.

China is deeply embedded in the international book market. It is the United States' biggest offshore supplier of print products, chiefly books. Exports of paper products from China rose by 76 percent between 2005 and 2006, according to government statistics, and are projected to rise a similar amount by the end of the decade.

Like many manufacturers, US and European publishers are turning to Chinese printers to churn out books, reducing costs by up to 30 percent, according to Pira International, a consultancy firm.

As a result of these trends, Chinese printing companies are cutting a visible presence at world book fairs.

"The main reason is price, and the other is quality," said Stephanie Chen, a sales representative for southern-China based Hengyuan Printing Co., who attended the most recent Frankfurt book fair, a major get-together for the world's publishing industry. China will be a special guest at next year's gathering.

As international and domestic demand for Chinese paper grows, the government is shutting down small paper mills to clean up the environment and force consolidation in a fragmented industry.

"The closures in China will tighten the demand" in China and lift the price of paper worldwide, said Sandy Lu, an economist for forest products industry group RISI in Shanghai.

Penguin UK, a British book publisher, spends about 60 percent of its manufacturing budget in China, a shift that created savings of 20 percent to 50 percent three years ago when it first moved here. Those savings have provided a cushion that the company says will allow the publisher to avoid raising prices - for now.

"Inflationary pressures will bite eventually but we have huge volumes and a broad supplier base," said Liz Allen, Penguin's production director in London. She said inflation will not be "a significant problem for some time to come."

Paper mills accounted for 17 percent of all industrial water pollution in 2005, according to the Chinese Paper Association.

In a bid to clean up China's rivers and spur paper makers to consolidate and modernize by using wood pulp, the government has closed hundreds of mills and targeted hundreds more. The restructuring is spurring heavy demand for wood pulp, nearly all of which China must import. As it does, worldwide prices for pulp could also rise, said RISI's Lu.